An employee’s employment is terminated by their employer. There is a question about whether there is a written employment contract in place.

Can the employer simply rely on the standard notice provisions in the Fair Work Act to terminate?

Should the notice that is to be given be greater?

The issue of reasonable notice was examined recently by the Federal Circuit Court in the matter of McGowan.

The Facts

The worker commenced employment with the employer in February 1999. The original employment contract provided for a ‘sliding scale’ in relation to notice of termination by either party. Over time, the worker’s positions with the employer were changed. The worker’s employment was terminated on 17 November 2014, at which time he was paid five weeks’ in lieu of notice in accordance with the minimum requirements of the Fair Work Act, but also taking into account the four weeks’ notice that was to be provided to the worker under his employment contract.

The worker argued that the notice period contained in his original contract of employment did not apply because of the subsequent variations to his position, and that any termination had to be effected by “reasonable notice” (i.e. the worker argued that in his case this amounted to 12 months’ notice).

In the background to these facts, the worker alleged that his employment had been terminated after he had exercised a “workplace right” after making “complaints or enquiries” in relation to his employment. This allegedly occurred during discussions with an external human resources consultant engaged by the employer, as well as during a subsequent discussion with the consultant and one of the company’s directors around one month later. Ultimately, the worker’s employment was terminated, and the reasons cited for this termination included a “lack of work performance in Sales” and the worker’s “HR skills” in the way he allegedly spoke to his staff and clients. These latter allegations involved five instances of “rude and crude” conduct.

The worker alleged that because he made these complaints or enquiries, his employment was terminated, in breach of the general protections provisions of the Fair Work Act.

The Findings

His Honour Judge McNab found that the second meeting between the worker, the human resources consultant and the employer’s director did constitute a “complaint or enquiry”, however concluded that this was not a factor in the termination of the worker’s employment. His Honour also had regard to, among other matters referred to in evidence, a report written by the human resources consultant at around the time of her first meeting with the worker which was highly critical of the worker’s management style.

It was also found by his Honour that the employment contract which was entered into between the worker and the employer in 1999 continued to govern the terms of the employment as at the date of termination. On that basis, his Honour found that there was no basis for implying a term of reasonable notice.

An argument was also raised by the employer that the notice of termination provisions of the Fair Work Act prevented the implication of a term of reasonable notice in any event.

While his Honour considered that there remained “genuine controversy” as to whether this provision of the Fair Work Act operated so as to displace the implication of a term of reasonable notice (particularly in the absence of an employee being employed under an award prescribing a period of notice), he considered that the provision was intended to provide a minimum period only.

Conclusion

In the decision referred to above, reasonable notice did not need to be implied into the worker’s contract because it was determined that a written contract set out the notice required on termination (even though the employer provided a further week to ensure compliance with the Fair Work Act).

Had circumstances arisen where the employer could not point to agreed terms of the employment setting out notice, matters could have been very different.

It is not unknown for courts to award damages representing the equivalent of earnings representing 12 months’ notice, particularly in situations involving senior employees with a considerable longevity of service.

What this case does demonstrate importantly, is that the notice provisions in the Fair Work Act can probably be regarded merely as setting out a minimum entitlement which is to be provided, and not the actual entitlement which may need to be provided to an employee.

The case also reinforces the importance of having written employment contracts in place for employees.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

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